RIL shares slip as report hints at likely theft of gas from ONGC block

NEW DELHI: Shares of Reliance Industries (RIL) slipped over 2 per cent in afternoon trade to slip below their crucial level of Rs 900 on Thursday, after draft prospectus from DeGolyer and MacNaughton (D&M) indicated that there was extraction of gas by RIL from ONGC's KG block.

At 02:00 PM, the stock had recouped some of the intraday losses, but was still trading 1.9 per cent lower at Rs 895.30. It hit a low of Rs 892.25, and a high of Rs 915 in trade during the day.

The dispute was sparked by ONGC's claims in 2013 that RIL had deliberately drilled wells close to the common boundary of the blocks and that some gas it pumped out was from the state-owned firm's adjoining block, said an ET report.

RIL has maintained it has abided by production sharing contract (PSC) and done only what was officially authorised "RIL, as a prudent operator, has followed all provision of PSC," it said.

RIL has maintained that it has abided by production-sharing contract (PSC) and done only what was officially authorised. "RIL, as a prudent operator, has followed all provision of PSC,""it said.

As per ET Now report, the draft is likely to reveal that 12-18 bcm of gas was extracted by RIL from the ONGC area, and for that it (RIL) might have to pay up to Rs 12,000 crore as compensation to ONGC. RIL's D6 block in the Krishna-Godavari basin borders ONGC's DWN 98/2 block and G4 gas field is also near RIL's block.

The government is likely to seek legal opinion on compensation from RIL to ONGC. The oil ministry will examine the draft report on gas theft within next week. ONGC had claimed in 2014 that between 2009 and 2013, RIL had siphoned off around 18 bcm of gas, and that 50 per cent of the drawn gas belongs to ONGC.

As per the ET report, ONGC, which has around 11 discoveries in the region, and it plans to develop G4 and KG-DWN blocks by 2017. It has over 4 trillion cubic feet of gas reserves in the KGDWN-98/2 block with an estimated output of 6-9 million standard cubic metres per day of gas.

Reliance Industries Limited (RIL)